Transcript

Hi, Everyone. Welcome to the Wiser Financial Advisor with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money.        

This is Josh Nelson, Certified Financial Planner and founder and CEO of Keystone Financial Services. We love feedback and we’d love it if you would pass it on to me directly: josh@keystonefinancial.com . Also please stay plugged in with us, get updates on episodes and help us promote the podcast. You can subscribe to us at Apple Podcasts, Spotify or your favorite podcast service. 

Let the financial fun begin!

Most people go through life from one distraction to another, one crisis after another, just doing what they have to do to get through the day. Sound familiar? Yeah, I’ve been there too, way more times than I care to admit. It sounds pretty empty and miserable, doesn’t it? But that’s exactly what happens if we aren’t intentional about what we choose to focus on and how we direct the one thing that we can never get back once it’s gone—and that’s our time.

Here on the Wiser Financial Advisor we cover many different topics. We certainly cover wealth creation and financial planning, but we also cover topics about life and personal development and have a lot of fun guests on as well, so I hope you continue to join us. Thanks for being here today.

Some of you have read, or at least have heard of Stephen Covey’s bestselling book, The Seven Habits of Highly Effective People. That book is one of the top personal development books of all time. The principles I learned from reading it have had a huge impact on both my personal and professional life over the years and I’d highly recommend you pick up a copy if you haven’t already. Today we’re going to talk about Habit #2, which is Begin With the End in Mind. What outcome am I really after and how can I use this principle to dramatically increase quality of life?

But first, this episode is brought to you by Keystone Financial Services, a top wealth management firm based in the land of love, Loveland, Colorado. At Keystone Financial Services we are here to provide unbiased advice and guidance. Our goal is to replace uncertainty with confidence and clarity when it comes to planning for your family’s financial future. Take the guesswork out of your financial future today and schedule a free initial conversation with one of our Certified Financial Planners. Visit www.keystonefinancial.com .

When it comes to the practical application of Habit #2, Begin With the End in Mind is a weekly planning process. Why weekly? Because a week is long enough to allow us to get perspective and remember the big picture, but it’s short enough to allow us to translate into the actions that will help us get more of what we really want out of life. Just as important, it helps us eliminate distractions and time-wasters—in other words, to say no to the things that don’t serve us.

There are three steps to the weekly planning process.

Step #1 is to review our mission and our roles both personal and professional. It’s really important to not leave ourselves out. How are we taking care of ourselves, mind, body and spirit? Because when we’re healthy, we have a lot more to give others through the other roles in our life.
Step #2 is choosing the big rocks. These are our weekly goals, weekly outcomes, the vital things we need to make sure to get accomplished this week. These are the things that will have the greatest impact on our mission and goals. The key question we need to ask ourselves is, “What is the most important thing I could do in this role this week?” Some weeks you’re going to have a lot more attention being paid to one role or another, but this is all about balance and making sure not to leave out areas of life that are important. It’s about focusing back on what we’re really trying to accomplish in this role this week.
Step #3 is to schedule the big rocks. I think you’ll agree that if it isn’t scheduled, it’s a lot less likely to happen.

So those are the three steps to the planning process. What does all this have to do with money and wealth creation? Well, everything. One role is to be the financial steward, the caretaker of your finances, because nobody else is going to do that for you, and that’s one thing you can’t delegate. You ultimately do have to be the financial steward of your own finances. If you have a family that depends on you, of course you are the financial steward for your family, which sounds like a lot of pressure and, well, it is. This area of your life will impact all the others.

Money will not buy happiness, but also you’ve probably heard me say: Not having money will also not buy happiness. So it’s important to remember that this is one area that you can’t delegate out, even if you’re getting somebody to help you like a Certified Financial Planner, a fiduciary. It’s important to have other people who can walk alongside you that have walked that path before, but how you take care of your finances will determine not only the quality of life today, but quality of life in the future, especially once you’re done working and are living off the income from your wealth.

Remember, income is the outcome and the more wealth you build, the more income you will have, and the more choices. You might have heard me describe financial planning as building a money machine. That’s the outcome, building up your money machine over the years, whether by using stocks or real estate or whatever it is filling up that money machine. Ultimately, that machine can pay you back for the rest of your life. These days a lot of people are retiring in their 50s or 60s. You might have two, three, or four decades to make that income last, so it’s important that you get the planning process to happen.

I’ve been in this business for 23 years, and I’ve often noticed in a first meeting with a new client, that people need help clarifying what is important to them. For example, when I sit down with people, often they want to start talking about tactics and accounts and things like that, but what I encourage them to do is to back up and think about why all that is important. It usually does boil down to income, either now or in the future and having Peace of Mind that there’s a plan with a high likelihood of working out. I say high likelihood because nobody can guarantee anything. The word “guarantee” is taboo in our industry and for good reason, because when it comes to financial planning and the markets, none of that stuff is guaranteed. We do need a plan though, and the plan can get adjusted over time and does get adjusted over time because there is so much to account for, things that can’t be known in advance.

Those of you who are clients know we go over two particular financial statements at every single client meeting. And of course, this is something you can do on your own as well.

The first statement we look at is your financial snapshot—your balance sheet which includes your assets and liabilities. We want to make sure to measure where you actually are and what that progress is over time. You want net worth to be going up over time, not down. If it’s going down, that means that you’re either losing money because of spending too much or it could be a temporary downturn like a market correction or bear market. It also could be accumulating too much debt. As Americans we’re very good at spending money. We’re good consumers, but that’s not going to serve you when it comes to wealth creation. It’s important to make sure that there’s consistent wealth creation to build that money machine up over time.

The second financial statement we always look at is the cash flow statement. The cash flow statement of the income statement versus the balance sheet is more factual because we know what your stuff is worth right now. This is just a moment in time, right? It’s a snapshot. The cash flow statement of the income statement tells a story of your future income expectations for what we think is going to happen with inflation and the market’s rates of return, factoring in your spending and things like that. It’s a story of what we think might happen. And of course, that needs to be adjusted over time, because that story will actually fill in as time goes on. Things are going to happen. There will be good things and bad things. You’ll have windfalls and also big expenses that you didn’t expect, so it’s important to consistently be measuring progress and measuring projections.

As Financial Planners, we like math, because if we don’t use math and logic, what ends up happening is we get sucked into emotions, and emotions will not always serve you well. In fact, oftentimes they will not serve you well when it comes to investing or wealth creation. Emotionally, people will often do a couple of things. They might be very fearful and too afraid to spend money, so they just accumulate and accumulate over time. And although there are some benefits to that from a financial security standpoint, that approach means missing out on a lot of life fulfillment. The other approach we often see is the greed side of things, where people look only at today. If they’re looking at just the emotions of today, then of course they want to spend some money, thinking that it will make them feel better. Sometimes it does, for example spending on experiences such as going on a vacation.

There’s nothing wrong with spending money as long as you’ve got other financial priorities, financial goals, a financial plan in check. I bring it up simply because as a Financial Planner, what’s critical is going back and measuring and making sure there’s a plan in place that has a high likelihood of not running out of money. The number one fear of any retiree, by the way, you’ve probably heard me say this before, is the fear of running out of money before death. That’s a legitimate fear because a lot of people do run out of money before they die. In fact they say that 30 percent of the retired population in America is dead broke. All they have is their Social Security. They don’t have any investments. They don’t have anything else to rely on. And that Social Security deposit might keep you from starving to death, but it’s probably not going to cover a lot more than that.

I want you to dream big. A lot of people just haven’t thought through this stuff. When I sit down with people for the first time, the discussion really goes back to goals and what people are trying to accomplish. Income largely is going to be the outcome at some point, either now or in the future, but it’s also important to think about or have a vision for what you want retirement to look like and what you want your life to look like today. Sometimes people actually have an aversion to building wealth because they have been told that money is evil or that there’s something wrong with being wealthy. The reality is that the wealthy people are the ones that give away most of the money and help most of the people out there when it comes to charitable endeavors. We want you to be in that position where you can help other people. We know that the two things that give people juice in life over time is 1) constantly learning and growing, whether retired or not, and also 2) giving back, serving, contributing,

and seeing the satisfaction of your effort speaking to someone else’s life.

Think about that and about what your own financial vision is. Think about that weekly process, that weekly cadence of going back and at least getting a high-level look, asking, “Where am I right now?

What do I want? Are my weekly activities matching up with that?” Otherwise we are just going to be in the world of distraction, of time-wasters, of social media. It isn’t that any of these things are terrible, but if that’s all we’re doing, we’re not going to get a lot of fulfillment in life. We are going to run out of time.

We want to be able to make sure to be able to look back and say, “I am so glad that I did,” rather than “I wish I had.”

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I hope you have a wonderful week, and God bless.

This episode has been prepared for informational purposes only and is not intended to provide and should not be relied upon for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.